National American University Holdings, Inc. Reports Fiscal 2013 Second Quarter and Six Months Results

National American University Holdings, Inc. Reports Fiscal 2013 Second
Quarter and Six Months Results
Company to host conference call on January 3, 2013, at 11:00 a.m. EDT
Financial and Operational Highlights
* Enrollment by headcount increased 7.2% over the same period last year to a
record 11,685 students as of November 30, 2012.
* FY 2013 second quarter total revenue increased 13.3% to $34.5 million from
$30.4 million in the prior-year period with the Company’s academic segment’s
revenue increasing 13.5% to $34.2 million from $30.2 million in the FY 2012
second quarter.
* FY 2013 second quarter net income attributable to the Company increased
47.5% to $2.9 million from $1.9 million in the prior-year period, and FY 2013
second quarter EBITDA increased 43.9% to $6.3 million from $4.4 million in the
prior-year period.
* The Board of Directors declared a cash dividend in the amount of $0.04 per
share on all shares of the Company’s common stock outstanding and of record as
of the close of business on December 14, 2012, which was paid on or about
December 28, 2012.
* Balance sheet at November 30, 2012, included cash and cash equivalents and
investments of $28.2 million; working capital of $22.4 million; no short-term
borrowings or long-term debt; and stockholders’ equity of $51.6 million.
Business Wire
RAPID CITY, S.D. -- January 2, 2013
National American University Holdings, Inc. (the “Company”) (NASDAQ: NAUH),
which through its wholly owned subsidiary operates National American
University (“NAU”), a regionally accredited, proprietary, multi-campus
institution of higher learning, today reported unaudited financial results for
its FY 2013 second quarter and six months ended November 30, 2012.
Ronald L. Shape, Ed.D., Chief Executive Officer of the Company, commented,
“Because of our efforts and investment in geographic and programmatic
expansion over the past two years, we have continued to achieve consistent
enrollment growth during a challenging time for our industry. We have remained
committed to providing academic quality and achieving positive student
outcomes, and were pleased that NAU’s enrollment increased 7.2% from the
previous fall term to a record 11,685 students. For the second half of fiscal
2013, we will continue to focus on improving economies of scale by striving to
grow enrollments at our current sites. During the fiscal 2013 second quarter,
we continued to realize the benefits of our expansion and development
initiatives with margin improvement on our educational services expense and
SG&A line items, which is in line with the strategic goals we set out for this
fiscal year. We anticipate this improvement will continue over the next
several quarters as newer locations further contribute to the Company’s top
line growth.”
Operating Review
NAU currently owns one property and leases 37 physical properties in the
states of Colorado, Indiana, Kansas, Minnesota, Missouri, Nebraska, New
Mexico, Oklahoma, Oregon, South Dakota and Texas. Several sites operate as
hybrid learning centers in strategic geographic locations. These centers
utilize small physical facilities through which the university provides
face-to-face support services as students participate in select, traditional
classroom courses while completing their remaining coursework online.
Of NAU’s 37 locations, the following sites are pending regulatory approvals:
*Tigard, OR
*Indianapolis, IN
*Roueche Graduate Center in Austin, TX
*Houston, TX
7.2% Enrollment Increase
Total NAU student enrollment for the fall term of 2012 increased 7.2% to a
record 11,685 students, up from 10,898 during the prior fall term. Students
enrolled in 102,727 credit hours compared to 95,792 credit hours during the
prior fall term. The current average age of NAU’s students continues to be in
the mid-30s, with those seeking undergraduate degrees remaining the highest
portion of NAU’s student population.
The following is a summary of student enrollment at November 30, 2012, and
November 30, 2011, by degree level and by instructional delivery method:
November 30, 2012 November 30, 2011
No. of % of No. of % of
Students Total Students Total
Graduate 393 3.4 % 385 3.5 %
Undergraduate and Diploma 11,292 96.6 % 10,513 96.5 %
Total 11,685 100.0 % 10,898 100.0 %
November 30, 2012 November 30, 2011
No. of % of No. of % of
Students Total Students Total
Online 6,892 59.0 % 5,329 48.9 %
On-Campus 2,704 23.1 % 3,771 34.6 %
Hybrid 2,089 17.9 % 1,798 16.5 %
Total 11,685 100.0 % 10,898 100.0 %
Financial Review
The Company, through its wholly owned subsidiary, operates in two business
segments: the academic segment, which consists of NAU’s undergraduate and
graduate education programs and contributes the primary portion of the
Company’s revenue; and ownership in multiple apartments and condominium
complexes from which it derives sales and rental income. The real estate
operations generated approximately 0.8% of revenues for the quarter ended
November 30, 2012.
Fiscal 2013 Second Quarter Financial Results
Total revenues for the FY 2013 second quarter increased 13.3% to $34.5
million from $30.4 million for the same period last year. Primarily as a
-- result of NAU’s enrollment growth, the academic segment’s total revenue
increased 13.5% to $34.2 million from $30.2 million for the prior-year
period.
For the FY 2013 second quarter, educational services expense was $7.5
-- million, or 21.9% of the academic segment’s total revenue, compared to
$6.9 million, or 22.9%, for the FY 2012 second quarter.
Educational services expense specifically relates to the academic
segment, and includes salaries and benefits of faculty and academic
administrators, costs of educational supplies, facility costs, faculty
reference and support material and related academic costs.
During the FY 2013 second quarter, SG&A expenses were $20.4 million, or
59.1% of total revenues, compared to $19.4 million, or 63.7%, in the
prior-year period. The dollar increase was primarily due to increased
-- spending on the development of new programming and the hiring of
additional staff at new campus locations. SG&A as a percentage of total
revenues decreased significantly quarter over quarter, from 69.3% in the
fiscal 2013 first quarter to 59.1% in the fiscal 2013 second quarter.
Income before income taxes and non-controlling interest for the FY 2013
-- second quarter increased 44.3% to $4.7 million from $3.2 million for the
same period last year.
Net income attributable to the Company for the FY 2013 second quarter
-- increased 47.5% to $2.9 million, or $0.11 per diluted share based on 25.6
million shares outstanding, from $1.9 million, or $0.07 per diluted share
based on 27.0 million shares outstanding, in the prior-year period.
EBITDA for the FY 2013 second quarter increased 43.9% to $6.3 million
-- from $4.4 million in the prior-year period. A table reconciling EBITDA to
net income can be found at the end of this release.
Fiscal 2013 Six Months Financial Results
Total revenues for the first six months of FY 2013 increased 14.5% to
$64.0 million from $55.8 million for the same period last year. Primarily
as a result of the continued increases in enrollment, the academic
segment’s total revenue increased 14.7% to $63.4 million from $55.3
million for the prior-year period. The Company attributes the enrollment
-- growth to its investment in new program development, program expansion,
and retention initiatives with current student enrollments over the prior
year. The increase in the academic segment's revenues was also the result
of increased book sales driven by enrollment growth and an average
tuition increase of 5.4% that was approved by NAU’s Board of Governors in
January 2012 and became effective September 2012.
NAU’s educational services expense for the first six months of FY 2013
was $14.7 million, or 23.1% of the academic segment’s total revenue,
-- compared to $13.3 million, or 24.0%, in the prior-year period. The
decrease as a percentage of academic segment revenues was the result of
economies of scale and efficiencies gained from geographic expansion and
ensuing enrollment growth.
During the first six months of FY 2013, SG&A expenses were $40.8 million,
or 63.8% of total revenues, compared to $36.2 million, or 64.8%, in the
prior-year period. The dollar increase was primarily due to a $3.8
-- million increase in spending related to ramping up operations at NAU’s
new physical locations, including hiring additional staff to provide the
support services necessary for NAU’s growing student population. During
the period, the Company also incurred $0.6 million in increased expenses
for unplanned health-related insurance claims.
Income before income taxes and non-controlling interest for the first six
months of FY 2013, was $4.5 million, compared to $5.1 million for the
-- same period last year. This decrease was primarily due to higher
educational service expense and SG&A expenses related to growth and
expansion.
Net income attributable to the Company during the first six months of FY
-- 2013 was $2.7 million, or $0.11 per diluted share based on 25.6 million
shares outstanding, compared to $3.0 million, or $0.11 per diluted share
based on 27.0 million shares outstanding, in the prior-year period.
The Company’s EBITDA for the first six months of FY 2013 increased 8.6%
-- to $7.6 million from $7.0 million in the prior-year period. A table
reconciling EBITDA to net income can be found at the end of this release.
Balance Sheet Highlights
(in millions except for percentages) 11/30/2012 5/31/2012 % Change
Cash and Cash Equivalents $ 13.1 $ 15.7 -16.6%
Available for Sale Investments 15.2 14.9 1.6%
Working Capital 22.4 24.6 -9.0%
Total Long-term Debt 0 0 N/A
Stockholders’ Equity 51.6 50.7 1.7%
Quarterly Dividend
The Board of Directors declared a cash dividend in the amount of $0.04 per
share on all shares of the Company’s common stock outstanding and of record as
of the close of business on December 14, 2012, which was paid on or about
December 28, 2012.
Conference Call Information
Management will discuss these results in a conference call (with accompanying
presentation) on January 3, 2013, at 11:00 a.m. EDT.
The dial-in numbers are:
(877) 407-0668 (U.S.)
(201) 689-8558 (International)
Accompanying Slide Presentation and Webcast
The Company will also have an accompanying slide presentation available in PDF
format at the “Investor Relations” section of the NAU website at
http://www.national.edu/InvestorRelations. The presentation will be made
available 30 minutes prior to the conference call. In addition, the call will
be simultaneously webcast over the Internet via the “Investor Relations”
section of the NAU website or by clicking on the conference call link:
http://mp163422.cdn.mediaplatform.com/163422/wc/mp/4000/15208/15212/21598/Lobby/default.htm.
About National American University Holdings, Inc.
National American University Holdings, Inc., through its wholly owned
subsidiary, operates National American University (“NAU”), a regionally
accredited, proprietary, multi-campus institution of higher learning offering
associate, bachelor’s, and master’s degree programs in health care and
business-related disciplines. Accredited by The Higher Learning Commission and
a member of the North Central Association of Colleges and Schools, NAU has
been providing technical and professional career education since 1941. NAU
opened its first campus in Rapid City, South Dakota, and has since grown to
multiple locations throughout the central United States. In 1998, NAU began
offering online courses. Today, NAU offers degree programs in traditional,
online, and hybrid formats, which provide students increased flexibility to
take courses at times and places convenient to their busy lifestyles.
Forward Looking Statements
This press release may contain forward-looking statements within the meaning
of the Private Securities Litigation Reform Act of 1995 regarding the
Company's business. Statements made in this release, other than those
concerning historical financial information, may be considered forward-looking
statements, which speak only as of the date of this release and are based on
current beliefs and expectations and involve a number of assumptions. These
forward-looking statements include outlooks or expectations for earnings,
revenues, expenses or other future financial or business performance,
strategies or expectations, or the impact of legal or regulatory matters on
business, results of operations or financial condition. Specifically,
forward-looking statements may include statements relating to the future
financial performance of the Company; the ability to continue to receive Title
IV funds; the growth of the market for the Company’s services; expansion plans
and opportunities; consolidation in the market for the Company’s services
generally; and other statements preceded by, followed by or that include the
words “estimate,” “plan,” “project,” “forecast,” “intend,” “expect,”
“anticipate,” “believe,” “seek,” “target” or similar expressions. These
forward-looking statements involve a number of known and unknown risks and
uncertainties or other assumptions that may cause actual results or
performance to be materially different from those expressed or implied by
those forward-looking statements. Other factors that could cause the Company’s
results to differ materially from those contained in its forward-looking
statements are included under, among others, the heading “Risk Factors” in the
Company’s Annual Report on Form 10-K, filed on August 3, 2012, and in its
other filings with the Securities and Exchange Commission. The Company assumes
no obligation to update the information contained in this release.
NATIONAL AMERICAN UNIVERSITY HOLDINGS, INC. AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS AND SIX MONTHS ENDED NOVEMBER 30, 2012 AND NOVEMBER 30,
2011
(In thousands except per share data)
Three Months Ended Six Months Ended
November 30, November 30,
2012 2011 2012 2011
REVENUE:
Academic revenue $ 31,518 $ 28,603 $ 57,995 $ 52,303
Auxiliary 2,721 1,575 5,420 3,002
revenue
Rental income — 270 267 544 537
apartments
Total revenue 34,509 30,445 63,959 55,842
OPERATING
EXPENSES:
Cost of
educational 7,515 6,918 14,650 13,270
services
Selling, general
and 20,386 19,387 40,807 36,162
administrative
Auxiliary 1,749 881 3,592 1,521
expense
(Gain) loss on
disposition of (13) 1 60 (131)
property
Total operating 29,637 27,187 59,109 50,822
expenses
OPERATING INCOME 4,872 3,258 4,850 5,020
OTHER INCOME
(EXPENSE):
Interest income 33 33 64 74
Interest expense (252) (81) (505) (81)
Other income — 20 29 55 60
net
Total other (199) (19) (386) 53
income (expense)
INCOME BEFORE 4,673 3,239 4,464 5,073
INCOME TAXES
INCOME TAX (1,808) (1,281) (1,750) (2,009)
EXPENSE
NET INCOME 2,865 1,958 2,714 3,064
NET INCOME
ATTRIBUTABLE TO 0 (15) (13) (98)
NON-CONTROLLING
INTEREST
NET INCOME
ATTRIBUTABLE TO
NATIONAL
AMERICAN
UNIVERSITY
HOLDINGS, INC.
AND
SUBSIDIARIES 2,865 1,943 2,701 2,966
OTHER
COMPREHENSIVE
INCOME (LOSS) —
Unrealized
losses on (13) (21) (35) (33)
investments
Reclassification
to earnings of 10 0 10 0
realized losses
Income tax
benefit related
to items of 0 0 0 0
other
comprehensive
loss
OTHER
COMPREHENSIVE (3) (21) (25) (33)
LOSS, NET OF TAX
COMPREHENSIVE
INCOME
ATTRIBUTABLE TO
NATIONAL
AMERICAN
UNIVERSITY $ 2,862 $ 1,922 $ 2,676 $ 2,933
HOLDINGS, INC.
Basic net
earnings
attributable to
National $ 0.11 $ 0.07 $ 0.11 $ 0.11
American
University
Holdings, Inc.
Diluted net
earnings
attributable to
National $ 0.11 $ 0.07 $ 0.11 $ 0.11
American
University
Holdings, Inc.
Basic weighted
average shares 25,576,902 26,884,087 25,575,683 26,797,010
outstanding
Diluted weighted
average shares 25,586,155 27,009,979 25,579,582 27,045,457
outstanding
NATIONAL AMERICAN UNIVERSITY HOLDINGS, INC. AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEET
AS OF NOVEMBER 30, 2012 AND AUDITED CONDENSED
CONSOLIDATED BALANCE SHEET AS OF MAY 31, 2012
(In thousands except share data)
November 30, May 31,
2012 2012
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 13,060 $ 15,658
Available for sale investments 15,163 14,917
Student receivables — net of allowance of $956
and $759 at November 30, 2012 and 4,203 2,804
May 31, 2012, respectively
Other receivables 810 366
Bookstore inventory 0 6
Income tax receivable 0 974
Deferred income taxes 1,193 1,914
Prepaid and other current assets 491 613
Total current assets 34,920 37,252
Total Property and Equipment - Net 43,792 40,496
OTHER ASSETS:
Condominium inventory 2,671 2,667
Land held for future development 312 312
Course development — net of accumulated
amortization of $1,186 and $1,715 at 1,194 1,241
November 30, 2012 and May 31, 2012, respectively
Other 1,216 1,130
5,393 5,350
TOTAL $ 84,105 $ 83,098
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Current portion of capital lease payable $ 53 $ 40
Accounts payable 4,040 4,175
Dividends payable 1,025 840
Student accounts payable 808 659
Income tax payable 10 0
Deferred income 253 236
Accrued and other liabilities 6,361 6,717
Total current liabilities 12,550 12,667
DEFERRED INCOME TAXES 5,098 5,098
OTHER LONG-TERM LIABILITIES 4,431 4,161
CAPITAL LEASE PAYABLE, NET OF CURRENT PORTION 10,432 10,460
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY:
Common stock, $0.0001 par value (50,000,000
authorized; 28,065,112 issued and 25,579,809
outstanding as of November 30, 2012; 28,057,891 3 3
issued and 25,574,124 outstanding as of
May 31, 2012
Additional paid-in capital 57,451 57,203
Retained earnings 11,892 11,239
Treasury stock, at cost (2,485,303 shares at
November 30, 2012 and 2,483,767 (17,596 ) (17,589 )
at May 31, 2012)
Accumulated other comprehensive income, net of
taxes - unrealized gain on available 0 25
for sale securities
Total National American University Holdings, Inc. 51,750 50,881
stockholders' equity
Net income attributable to non-controlling (156 ) (169 )
interest
Total equity 51,594 50,712
TOTAL $ 84,105 $ 83,098
The following table provides a reconciliation of net income attributable to
the Company to EBITDA:
Three Months Ended Six Months Ended
November 30, November 30,
2012 2011 2012 2011
(dollars in thousands)
Net Income attributable to $ 2,865 $ 1,943 $ 2,701 $ 2,966
the Company
Income (Loss) attributable
to non-controlling 0 15 13 98
interest
Interest Income (33 ) (33 ) (64) (74 )
Interest Expense 252 81 505 81
Income Taxes 1,808 1,281 1,750 2,009
Depreciation and 1,378 1,070 2,729 1,949
Amortization
EBITDA $ 6,270 $ 4,357 $ 7,634 $ 7,029
EBITDA consists of income attributable to the Company, less income from
non-controlling interest, plus loss from non-controlling interest, minus
interest income, plus interest expense (which is not related to any debt but
to the accounting required for the capital lease), plus income taxes, plus
depreciation and amortization. The Company uses EBITDA as a measure of
operating performance. However, EBITDA is not a recognized measurement under
U.S. generally accepted accounting principles, or GAAP, and when analyzing its
operating performance, investors should use EBITDA in addition to, and not as
an alternative for, income as determined in accordance with GAAP. Because not
all companies use identical calculations, the Company’s presentation of EBITDA
may not be comparable to similarly titled measures of other companies and is
therefore limited as a comparative measure. Furthermore, as an analytical
tool, EBITDA has additional limitations, including that (a) it is not intended
to be a measure of free cash flow, as it does not consider certain cash
requirements such as tax payments; (b) it does not reflect changes in, or cash
requirements for, its working capital needs; and (c) although depreciation and
amortization are non-cash charges, the assets being depreciated and amortized
often will have to be replaced in the future, and EBITDA does not reflect any
cash requirements for such replacements, or future requirements for capital
expenditures or contractual commitments. To compensate for these limitations,
the Company evaluates its profitability by considering the economic effect of
the excluded expense items independently as well as in connection with its
analysis of cash flows from operations and through the use of other financial
measures.
The Company believes EBITDA is useful to an investor in evaluating its
operating performance because it is widely used to measure a company’s
operating performance without regard to certain non-cash expenses (such as
depreciation and amortization) and expenses that are not reflective of its
core operating results over time. The Company believes EBITDA presents a
meaningful measure of corporate performance exclusive of its capital
structure, the method by which assets were acquired and non-cash charges, and
provides us with additional useful information to measure its performance on a
consistent basis, particularly with respect to changes in performance from
period to period.
Contact:
National American University Holdings, Inc.
Dr. Ronald Shape, 605-721-5220
rshape@national.edu
or
Investor Relations Counsel
The Equity Group Inc.
Carolyne Yu, 212-836-9610
cyu@equityny.com
or
Adam Prior, 212-836-9606
aprior@equityny.com